TRENTON, NJ–The main rationale for real estate in any pension portfolio is diversification, and that may include real estate outside New Jersey and even overseas, says Kevin B. Higgins, the new head of real estate investing for the New Jersey Department of the Treasury, in an exclusive interview with GlobeSt.com.

“You want assets that are not correlated with fixed income and equities," says Higgins. "You identify appropriate opportunities along the spectrum for real estate.”

Higgins, a lifelong New Jersey resident, is responsible for real estate investments for New Jersey public pension funds. He joined the state treasurer's Division of Investment in March.

Higgins, who formerly was a principal with Crossroads Advisors LLC, which provides real estate consulting for private equity, pension sponsors, insurance companies, and others, tells GlobeSt.com that that experience, combined with the fact that several members of his family benefit from New Jersey state pensions, raised his interest in pension investing. He says the state's pension fund is similar to his experience with institutional pension sponsors.

“It always struck me as being a worthwhile endeavor for my experience,” he says of pension investing. He's been involved in real estate investments for more than 20 years, including lending and acquisitions, workouts and restructurings.

Higgins, who acknowledges still getting up to speed on the state's portfolio, is circumspect about the kinds of real estate investments he will seek. “I think you have to look at where you might see any particular opportunity at any particular time,” he says. “Naturally you look at the major property types, the major markets, but when you put together a portfolio it's not a matter of getting a little bit of everything. You would build that over time. What may or may not make sense for the State of New Jersey has got to be weighed against what's in the existing portfolio.”

New Jersey, like other institutions, has targets for sector allocations in its real estate portfolio, but “a lot of investors tend to be underweight as they look for attractive investment opportunities,” he says. Higgins declined to say if the fund would target real estate investments in economically distressed areas of New Jersey like Newark and Camden.

“You can play 'distressed' at various points in the cycle,” he says. “A lot of the easy pickings for 'distressed' have probably been worked through the system.”

The real estate investment group's mandate is to put together “the appropriate portfolio,” Higgins says. “We're looking for attractive investments both domestically in the US and selectively overseas.”

Higgins has spent the past two years as an adjunct professor at New York University's Schack Institute of Real Estate. Whether he's able to continue teaching “remains to be seen,” he says. Married for more than 26 years, Higgins and his wife have two daughters.

Instant Insights /

NJ Pension's New Real Estate Investment Head Seeks Diversification

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